Text Size

JUSTICE PLANS NEW CASES FROM FINANCIAL CRISIS — Attorney General Eric Holder says the Justice Department is planning to announce a number of new cases stemming from the financial crisis against large financial institutions in the coming months.

In a sit-down with The Wall Street Journal Tuesday, Holder said, “My message is, anybody who’s inflicted damage on our financial markets should not be of the belief that they are out of the woods because of the passage of time. If any individual or if any institution is banking on waiting things out, they have to think again.”

WSJ’s Devlin Barrett: “Mr. Holder declined to discuss specifics or say when such cases would be announced, but he indicated his own career schedule wouldn’t affect those decisions. Mr. Holder has previously said he doesn’t plan to serve through the end of the Obama administration.

"In Tuesday’s interview, he said he wouldn’t leave the job before making major charging decisions on cases stemming from the financial collapse. According to associates, he could step down later this year. ‘I expect to be here to announce a series of significant matters that we’ll be bringing,’ he said.

“While he has been criticized for overstating past efforts, Mr. Holder said his marching orders to prosecutors around the country have been clear and forceful: ‘Remain aggressive and pursue these kinds of cases.’” http://on.wsj.com/14hpA6U

FIRST LOOK: WARREN PUSHES HOLDER ON MORTGAGE SETTLEMENT – Sen. Elizabeth Warren (D-Mass.), one of the most outspoken advocates of taking big banks to court, plans to send a letter to Holder today asking for more details about the $25 billion settlement between state and federal law enforcement officials and the country’s largest mortgage servicers in March 2012.

As part of the settlement, the servicers agreed to pay $225 million to obtain releases from liability under the False Claims Act stemming from mortgage insurance claims they submitted to the Federal Housing Administration. Warren is concerned that the government settled on the cheap, despite FHA’s worsening financial condition. She said the deal may also be an example of the government’s timid strategy against financial institutions, which she has highlighted at recent hearings on Capitol Hill.

“I believe that DOJ and our banking regulatory agencies prove unwilling over time to take the big banks to trial or even require admission of guilt when they cheat consumers and break the law — either out of timidity or lack of resources — then the agencies lose enormous leverage in settlement negotiations,” Warren said in the letter. “Settlements are important and play a necessary role in any enforcement regime, but it is critical that the government take steps to maximize its leverage and avoid settling on the cheap.” http://politico.pro/14VpDB7

IT’S STILL THE ECONOMY, STUPID — When it comes to how Americans measure their approval of President Barack Obama, the top issue that they consider is — wait for it — the economy. According to the latest Gallup poll, the public gives the most weight to the state of the economy when they consider the president’s performance, followed by other national issues like healthcare, terrorism and the federal budget deficit.

Gallup’s Jeffrey M. Jones: “Americans who approve of the job Obama is doing on the economy are six times more likely to approve of Obama’s overall performance than those who disapprove of Obama’s handling of the economy. That is nearly double the impact of any other issue. ...

“The combination of his lower approval rating on the economy and its importance in predicting his overall approval rating makes it a problematic issue for the president at the moment. It also suggests that his overall approval rating is unlikely to show sustained improvement until Americans believe he is doing a better job of handling the economy.” http://bit.ly/1f0nARV

THIS MORNING ON POLITICO PRO FINANCE — POLITICO's Kevin Cirilli on how lawmakers are using people’s love of beer to promote wonky tax and finance policies ... To learn more about Pro's subscriber-only coverage — and to get Morning Money every day before 6 a.m. — please contact Pro Services at (703) 341-4600 or info@politicopro.com.

GOOD WEDNESDAY MORNING — Happy hump day! Major League Baseball has suspended Red Sox Pitcher Ryan Dempster for intentionally hitting Alex Rodriguez during Sunday night’s game against the Yankees. Do you think Yankees Manager Joe Girardi deserved his fine? Think Dempster just lost control? Think everyone needs to take a deep breath? Email us at kdavidson@politico.com and mlee@politico.com — and send your financial services-related tips, questions or suggestions, too. You can also follow us on Twitter: @katedavidson and @mj_politico. And as always, follow @morningmoneypro and @POLITICOPro for all of the latest coverage from POLITICO Pro.

**A message from FEAI, the Financial Education and Advocacy Initiative: Thank you to the credit unions that have remained faithful to your core mission. For those that have grown beyond recognition, but still wish to have taxpayers subsidize you @ItsTime2Pay: https://twitter.com/ItsTime2Pay **

DRIVING THE DAY — Former FDIC Chairman Sheila Bair speaks at the National Press Club at 9 a.m. ... Existing home sales at 10 a.m. expected to rise to 5.15 million from 5.08 million. ... FOMC minutes at 2 p.m. will be closely monitored for any indication of changes to Fed’s monetary policy. ... U.S. District Judge Richard Leon holds hearing on debit interchange at 2 p.m. ...

THE HOTTEST CAMPAIGN OF 2013: FED CHAIRMAN —The Washington Post’s Zachary Goldfarb: “Lawrence H. Summers, one of the top candidates to lead the Federal Reserve, was being beaten up, and his friends from his White House years wanted to help him. So earlier this month, recently departed Treasury secretary Timothy F. Geithner and other former Obama administration officials joined Summers for a private strategy call, according to people familiar with the discussion.

“The old colleagues compared notes on what reporters were asking about Summers, who was under a steady assault from liberals who consider him as soft on regulating banks, and mapped out how they might respond. President Obama’s long-term advisers have been working to help Summers in what has become the hottest political campaign of 2013: the race to succeed Ben S. Bernanke as Fed chairman.” http://wapo.st/1bRpq7Q

WALL STREET RETREATS FROM COMMODITIES BUSINESS – WSJ’s Christian Berthelsen and Tatyana Shumsky: “Aluminum deliveries into warehouses run by big banks and trading firms have plunged this summer, highlighting Wall Street’s retreat from the once-lucrative commodities business amid stagnant markets, new rules and regulatory scrutiny.

“The slump marks the unraveling of a practice that boosted profits for several years at warehouse operators including Goldman Sachs Group Inc. and Glencore Xstrata PLC. Bank warehousing practices now are the subject of investigations by several U.S. authorities, including a Senate panel. ... ‘The game as we know it seems to be over,’ said James Malick, a partner in the capital markets practice at Boston Consulting Group.” http://on.wsj.com/14Upvlt

JPM INUNDATED WITH LEGAL PROBLEMS — FT’s Tracy Alloway in New York: “When JPMorgan Chase emerged from the financial crisis as one of the stronger banks left in the US financial industry, the list of legal proceedings it published as part of its quarterly regulatory filings ran to two pages. Fast forward five years and that list has jumped to a startling 10 pages long. ...

“‘We are swarming these issues so nothing can fall through the cracks,’ said one JPMorgan executive who declined to be named. ‘We’ve got to be on top of everything and we’re committing a tonne of resources to it.’” http://on.ft.com/18IgFLJ

DEATH OF INTERN SENDS SHOCKWAVES — The Atlantic’s Rebecca Greenfield asks: “Did Bank of America’s long hours kill a summer intern?”: “Bank of America has confirmed that the ‘highly diligent intern’ Moritz Erhardt passed away just before completing his summer program in London after allegedly working 72 hours straight. Reports have suggested that the notoriously rigorous program, which Erhardt’s friends claimed required eight all-nighters in two weeks, exhausted him to death. ... [A]s of now, the official cause of death is unknown and the Metropolitan Police is treating the death as ‘non-suspicious,’ a police spokesperson told Bloomberg News.” http://bit.ly/171WJUF

EXCHANGES SCRUTINIZE TRADES AFTER GOLDMAN SNAFU — POLITICO’s Zachary Warmbrodt: “Exchange operators are reviewing a large number of erroneous trades that might be canceled after Goldman Sachs was said to have inadvertently sent equity options orders to several markets this morning. ... NYSE Amex Options said in a trader update that it was ‘reviewing a large number of erroneous executions’ that appear to have taken place from 9:30-9:47 a.m. in names beginning with a range of letters from H-L.” http://politico.pro/16J85Pc

TAPER TALK —

ON QE, WHAT MARKETS MIGHT BE MISSING – CNBC’s Jeff Cox: “Investors focusing on the tapering question probably are missing the bigger picture about Federal Reserve policy and how it will continue to shape financial markets. The central bank itself has been insistent recently that the $85 billion a month in bond purchases surrounding the tapering question are the less relevant of the two main prongs — the other being the near-zero funds rate — of the historically easy monetary policy since the financial crisis.

“Still, investors continue to focus on Long-Scale Asset Purchases — known formally as quantitative easing and less so as money-printing — while not paying enough attention to the more important question of forward guidance and how that affects the interest rate picture.” http://cnb.cx/16HMkiL

CRUDE CONTINUES TO FALL – Bloomberg’s Moming Zhou: “West Texas Intermediate crude fell for a second day amid speculation that the Federal Reserve will reduce stimulus measures next month, curbing investors’ appetite for commodities. ... Minutes from the Fed’s July meeting, scheduled to be published tomorrow, will probably provide details about deliberations on when to taper $85 billion in monthly bond buying.” http://bloom.bg/171UpNu

ASIAN MARKETS HIT HARD AHEAD OF TAPER — NYT’s Landon Thomas Jr.: “In a city where skyscrapers sprout like weeds, none grew as high as the Sapphire tower in Istanbul. Today, it stands as a symbol of how far the mighty may fall. ... [W]ith expectations mounting that the Federal Reserve, led by its departing chairman Ben S. Bernanke, may soon begin to tighten its monetary spigot, Istanbul’s skyline could well be a harbinger of an emerging-market bust brought on by unpaid loans, weakening currencies, and, eventually, the possible failure of developers and banks.” http://nyti.ms/18IHLSQ

EGYPT WATCH –

MUSLIM BROTHERHOOD LEADER ARRESTED – Bloomberg’s Ahmed el-Sayed, Mariam Fam and Tarek El-Tablawy: “The spiritual leader of Egypt’s Muslim Brotherhood was arrested in Cairo as the military-backed government pressed a crackdown on Islamists that has claimed hundreds of lives in the past week. Mohammed Badie, who was wanted on charges of inciting murder, was detained in a Cairo apartment where he had been instructing supporters protesting President Mohamed Mursi’s July 3 removal by the military, Public Security Department official Yasser Abdel-Rauf said.” http://bloom.bg/16Yeoea

WHAT WILL HAPPEN TO U.S. AID TO EGYPT? – The Washington Post’s Anne Gearan: “Officials say the administration has already delivered the majority of aid to Egypt for the current fiscal year. A small amount could still be yanked as a result of the July 3 ouster of Egyptian president Mohamed Morsi or the bloody crackdown last week by the military-backed interim government . ... The choices before the administration include withholding some money, shifting it to other programs or doing nothing. Separately, the administration and Congress will have to decide what to do about next year’s allotment.” http://wapo.st/19GPndd

ALSO FOR YOUR RADAR –

ALLY EYEING THE (TARP) EXIT — Reuters’ Peter Rudegeair: “Ally Financial Inc. will sell $1 billion of unlisted shares to investors and repay taxpayers nearly $6 billion taking a big step closer to exiting U.S. government control. With the transactions, Ally will have repaid the Treasury about $12.1 billion of the $17.2 billion taxpayer bailout it received during the financial crisis.” http://reut.rs/1f0RhSU

SEC STRUGGLES WITH TURNOVER — WSJ’s Jeanne Eaglesham: “Mary Jo White is the Securities and Exchange Commission’s third boss in nine months. And it is even harder to keep up with the rest of the turnover near the top of the nation’s securities-law enforcer. In barely the past year, four of the agency’s five divisional chiefs have stepped down, including the top SEC officials for trading and markets, corporation finance and enforcement, along with four of the 11 regional directors in offices scattered across the U.S.” http://on.wsj.com/19wgPGQ

PENSIONERS PROTEST DETROIT BANKRUPTCY — Bloomberg Businessweek’s Karen Weise: “Monday brought the deadline to challenge Detroit’s filing for Chapter 9 bankruptcy protection, and by the afternoon the court docket was ‘blowing up’ with objections, as one muni market reporter put it. ... The filings questioned whether Detroit had satisfied the three points cities must prove to enter bankruptcy: that it’s insolvent, with nothing more that can be done to meet its obligations; that it’s allowed to file for bankruptcy under state law; and that it tried to negotiate in good faith with creditors.” http://buswk.co/1f00Ykq

** A message from FEAI, the Financial Education and Advocacy Initiative: Thank you to the credit unions that have remained faithful to your core mission. For those that have grown beyond recognition, but still wish to have taxpayers subsidize you @ItsTime2Pay: https://twitter.com/ItsTime2Pay **